Coding bootcamps have not just devised innovative ways to educate students; they have also been experimenting with new, student-first financing methods to help expand access to their programs. Indeed, whereas in the past, students would only be able to pay tuition upfront, there are now many options open to a prospective bootcamp student. This breadth of options makes it easier for you to finance your bootcamp education based on your unique needs, but it also means you need to spend some time considering the options available to you.
Perhaps the most innovative financing options offered by bootcamps are those where students only pay when they succeed. There are two different types of pay-when-you-succeed tuition: Income Share Agreements (ISAs) and deferred tuition. These financing methods give you the chance to attend a bootcamp, acquire the skills you need to break into your new career, and only pay when you get a job earning over a certain amount.
But what are the differences between these two methods of financing a bootcamp? In this guide, we are going to break down ISAs and deferred tuition, so you can make an informed decision about how to finance your bootcamp education.
What is Deferred Tuition?
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Deferred tuition is a method of paying for your education where you pay no tuition—or only a small amount—upfront. Instead, you start paying a certain amount of tuition once you graduate and find a job.
What is an Income Share Agreement?
Income Share Agreements are a method of paying for your education where you agree to pay a percentage of your post-graduation income to a school, but only if you earn over a certain amount. Most bootcamps ask that you share between 8 and 20 percent of your income for a period of between one and four years.
You only start making payments toward your ISA when you earn over a certain amount: referred to as the “minimum income threshold.” This is usually between $30,000 and $60,000, depending on the bootcamp.
So far, around 42 bootcamps offer ISAs to their students. ISAs are also offered by some colleges, as well, such as Purdue University and Lackawanna College as an alternative to traditional student loans.
What are the Advantages of ISAs and Deferred Tuition?
Both of these methods of payment are referred to as risk-sharing tuition models. This comes with a couple of advantages.
Downside Protection: Firstly, ISAs and Deferred Tuition provide downside risk for students. In an ISA or deferred tuition agreement, you’ll only start making payments when you get a job, and you usually do not owe anything until you earn over a certain amount. This means that you will only pay if your education leads to success in the labor market. In short, if you earn less, you pay less; if you earn more, you’ll pay more.
Incentive Alignment: ISAs and Deferred Tuition models also incentivize schools to do their jobs better. If a student does not succeed, the school will realize a direct effect on its balance sheet, which will encourage them to invest more in the success of students. Indeed, bootcamps which offer ISAs and Deferred Tuition often have higher quality services because if students didn’t succeed, the school likely would not exist, or would struggle to operate.
Diversity: ISAs also take the pressure of paying upfront tuition away from students; upfront tuition costs often act as a barrier to going to a bootcamp. Because bootcamps are Title IV ineligible, students cannot apply for grants from the government to finance their education; you have to pay out-of-pocket.
But with an ISA, you will only pay if you succeed, and your payments will depend on how much you earn after you graduate. This, in turn, promotes more diversity in bootcamps, because people who would traditionally be unable to pay upfront—those individuals who are more likely to have low incomes or be part of a minority group—can attend a school.
What’s the Difference Between an ISA and Deferred Tuition?
The main differences between ISAs and deferred tuition are as follows:
- Students who pay deferred tuition usually pay in monthly installments of a predetermined amount, rather than an amount based on their income
- Deferred tuition may or may not have a minimum income threshold
- Deferred tuition payments usually halt when a student has paid back the cost of their tuition, whereas ISA payments can exceed the cost of tuition if a student earns a high salary.
Are ISAs and Deferred Tuition Programs Regulated?
At present, there are no federal regulations that govern Income Share Agreements. That said, the ISA Student Protection Act was proposed in mid-2019 with bipartisan support which, if passed, would create a strong regulatory framework around these agreements.
This legislation would, among other things, set a national minimum income threshold at 200 percent of the Federal Poverty Level (equal to $24,980 in 2019), make ISAs dischargeable in bankruptcy, create information disclosure requirements, and more. But right now, ISAs are not regulated by federal law.
In the State of New York, the Bureau of Proprietary School Supervision (BPSS) requires that schools charge students the same tuition rates for the same course, which may affect ISAs because they are income-contingent. But the exact relevance of this regulation to ISAs is unclear.
That said, most ISA providers are in compliance with industry best practices. For example, most bootcamps have an income-share percentage, which is less than 20 percent—the highest percentage value deemed reasonable by schools. Most programs are also designed by organizations like Vemo Education and Leif, who are responsible for ensuring programs are compliant with any relevant laws and are fair to both students and schools.
What Happens if You don’t Find a Job after Graduation?
Different bootcamps have varying policies around what happens if you don’t find a job after graduation when you have either an ISA or deferred tuition agreement.
Generally, students are given a grace period during which they can look for a job before their ISA or deferred tuition agreement starts. After the grace period is up, your ISA or deferred tuition agreement will become active.
If you don’t earn over a certain amount, you’ll pay nothing. But if this is the case and you have an ISA, it may go into deferment. This means that the length of your ISA will not go down, but the deferment period will. For example, if you have an ISA with a two-year term and a three-year deferment period, you’ll first go through the deferment period, and if you still aren’t making over a certain amount, then the term of the agreement will reduce.
If you are still not earning over a certain amount after the term of your ISA or deferred tuition agreement has expired, you’ll pay nothing.
For example, Lambda School students have five years to make payments; if they don’t earn over $50,000 in that time period, they’ll pay nothing. General Assembly’s ISA expires if students don’t find a job earning $40,000 or over within eight years of graduating.
Who Should Take out an Income Share Agreement?
There are a few reasons why you may want to consider taking out an Income Share Agreement. Here are a few of the most common situations where taking out an ISA makes sense:
- You can’t save money to pay for a bootcamp upfront
- You don’t want to take out a loan, or you can’t due to your credit history
- You are unsure about your future earnings, and only feel comfortable paying if the bootcamp has helped you succeed
That said, not everybody can benefit from taking out an ISA or entering into a deferred tuition agreement. Here are a few situations where ISAs do not work:
- You may end up paying more than the cost of tuition if you command a very high salary after graduation
- If you already have loans, you may have a large amount of money going out of your paycheck each month after graduation (some bootcamps will not allow people with a certain level of debt to take out an ISA)
- If you’re interested in learning a new skill, but do not want to pursue a career in the field you are studying, a traditional loan may be better.
Which Schools Offer Income Share Agreements?
Over 42 bootcamps offer Income Share Agreements to their students. These schools include:
|School||Term (months)||Income Share (%)||Payment Cap (multiple of tuition)||Minimum Threshold|
|Hack Reactor / Galvanize||48||10||1.75||$50,000|
|Kenzie Academy (full-time)||48||13||N/A||$40,000|
Other bootcamps that offer ISAs include:
- Mayden Academy
- Make School
- Turing School
- V School
- 4Geeks Academy
Which Schools Offer Deferred Tuition?
Deferred tuition is also a popular payment option among bootcamps. Here are a few bootcamps that offer deferred tuition payment options:
App Academy is a coding bootcamp that first pioneered income-based repayment options. App Academy offers software engineering courses both in-person and online to students, where they acquire all of the skills they need to succeed in a position in the field.
Students at App Academy can pay a $9,000 down payment, then pay $14,000 in deferred tuition over a flexible payment schedule. App Academy also offers upfront payment options and ISAs to students.
Access Labs by Flatiron School
Access Labs is a 15-week software engineering program aimed at students who cannot afford to pay tuition upfront. The school uses the same full-stack engineering curriculum as Flatiron School.
Students at Access Labs pay 10 percent of their income after graduation until it is paid back in full. If a student takes part in all career services programs and does not find a job within six months, tuition will be forgiven.
Other bootcamps that offer deferred tuition include:
Which Bootcamps Offer Living Stipends?
A number of coding bootcamps offer living stipends to their students. Living stipends are payments made on a monthly basis to students who need the money to pay for their rent, food costs, and other monthly bills. These stipends help students proceed with a program without having to worry about finding a job or working full-time to pay their costs.
In exchange for taking out a living stipend, students must pay back more on their ISA. Here is a list of bootcamps that offer living stipends:
- Thinkful: Students can receive a Thinkful living stipend of $1,500 per month for the duration of the program. In exchange, students pay 15 percent of their income for four years, only when they earn over $40,000.
- Lambda School: Students can receive a monthly stipend of $2,000 for nine months. In exchange, students pay Lambda School 10 percent of their salary for five years, once they find a job earning over $50,000.
What Should You Consider When Evaluating an ISA or Deferred Tuition Agreement?
Here are a few things you should consider when evaluating an ISA or deferred tuition agreement:
- Some schools use “deferred tuition” and “ISA” to mean the same thing. Make sure you verify that what you actually agree to is a deferred tuition agreement, or an ISA.
- What happens if you don’t find a job within a certain period of time? Will tuition be forgiven?
- Does the bootcamp ask you to accept the first job you are offered?
- What is the minimum salary under which you will not pay anything toward your ISA/deferred tuition agreement? Is there a minimum salary defined?
- Does the bootcamp have a cap on how much you can pay before your ISA/deferred tuition agreement is forgiven?
- Does the bootcamp use a time limit (after 12 months, your remaining tuition will be forgiven) or a monetary cap (when you pay us $30,000)?
- Before you select any payment option, make sure you calculate the total payments and consider which one works best for you.
Above all, make sure you read all of the terms and conditions, and verify them with the school. This will protect you from being caught off-guard further down the line with terms you don’t understand.
What Other Payment Options Exist?
ISAs and Deferred Tuition are not the only options available to you. Here are a few other popular ways in which people pay for their bootcamps:
- Take out a loan from a bootcamp lender. Lenders such as Ascent Funding and Upstart issue loans to people who are attending a coding bootcamp. You will pay back your loan in monthly installments, with interest, until the balance has been paid off.
- Pay upfront. Almost all bootcamps offer an upfront payment option if you would prefer to pay for your whole education upfront.
- Scholarships. A number of scholarships are available to students of certain bootcamps. These scholarships are often offered to people from underrepresented groups, such as people of color, or veterans.
- GI Bill. If you’re a veteran, you may be eligible for GI Bill benefits, which will cover some or all of your bootcamp tuition.
If you want to learn more about how you can pay for your bootcamp, read our “How to Pay for Coding Bootcamp” ultimate guide.
Income Share Agreements can be a great way to finance your education. ISAs align the incentives of schools and students and allow you to pay only when you succeed, and deferred tuition offers similar benefits as well. If you’re thinking about going to a bootcamp, you should consider whether deferred tuition or ISAs are right for you. If not, there are other payment options available, as we covered above.
If you are interested in learning more about Income Share Agreements, read our Coding Bootcamp Income Share Agreements guide. You can also read our comprehensive report on the State of the Income Share Agreement Market in 2019.
About us: Career Karma is a platform designed to help job seekers find, research, and connect with job training programs to advance their careers. Learn about the CK publication.